Lakelands under fire on ‘derisory’ milk rise
ICMSA ‘astonished’ as October price increases by just 1c/l
FARM organisations have slammed the decision by Lakeland Dairies to increase its October milk price by just 1c/l to 27c/l (VAT inclusive).
The ICMSA labelled the increase “derisory” and said there was “frustration and astonishment” among Lakelands suppliers that the co-op had not reflected the significant improvement in global markets for dairy commodities.
The IFA expressed disappointment with the Lakelands decision and pointed out that the Ornua index had moved to 95.9, which was equivalent to a farm-gate price of 28c/l.
A surge in global dairy markets over the last fortnight saw the New Zealand GDT jump by 11.4pc, with the sale price of whole milk powder (WMP) up 19.8pc, butter up 4pc and skim milk powder (SMP) up 6.5pc.
It was widely anticipated that dairy processors would reflect the improved sentiment on world markets by increasing October milk prices by at least 2c/l.
However, industry sources pointed out that many processors were tied into forward contracts for commodities.
Political uncertainty
They also maintained that the continuing uncertainty following the Brexit vote and US presidential election had unsettled markets.
But this view has not been accepted by the farm organisations, who contend that other processors will now follow Lakelands lead and delay price increases to farmers.
“It would be difficult to convey the frustration and astonishment expressed by the farmers who had contacted ICMSA to point out that the Lakelands price — even after the derisory single cent rise — was actually below the price equivalent to the Ornua price index,” said ICMSA dairy chairman John Quain.
Mr Quain said processors could not “hide behind” the impact of Brexit when global markets were increasing steadily for dairy commodities.
Both the ICMSA and the IFA said dairies setting their October milk price this week had an opportunity to help alleviate the continuing cashflow pressures on dairy farms by delivering a significant lift in returns to suppliers.
Meanwhile, Glanbia is due to announce its October milk price today.